DocuSign Forms Golden Cross as Morgan Stanley Raises Target

DocuSign shares climbed to $67.05 after Morgan Stanley raised its price target to $75, reflecting a series of analyst upgrades this week. The stock is up roughly 62% from its lowest level this year and the 50-day moving average has moved above the 200-day moving average, creating a technical pattern known as a golden cross.

The rally follows second-quarter results that beat expectations. DocuSign reported Q2 revenue of $875 million, a 9% increase year over year. Management said Intelligent Agreement Management, the company’s suite of AI agents for contract workflows, accounted for 15.1% of annual recurring revenue as of July 31, up from 12.6% in April.

DocuSign describes its Intelligent Agreement Management product as a group of AI agents that analyze agreement terms, generate contract language, and include pre-built agents for tasks such as agreement intake and vendor renewals. The platform also includes an AI agent studio that customers can use to build, govern and deploy custom agents.

For the third quarter, DocuSign raised its guidance and forecasted revenue between $886 million and $890 million, with gross margins of 81.5% to 81.9%. The company reported a gross margin of 79.7% in the latest quarter, up from 79.3% previously, and free cash flow exceeding $295 million.

Management returned capital to shareholders through $306 million in share repurchases, reducing outstanding shares to about 193 million from roughly 205 million earlier in 2024.

Several brokerages adjusted their targets in recent days. Morgan Stanley set a $75 target. Evercore ISI moved its target to $65, BTIG raised its target to $75, and Citizens increased its target to $86. Needham maintained a positive view. Analysts referenced improving fundamentals and stronger demand for DocuSign’s AI capabilities when updating their outlooks.

A company statement from CEO Dan Springer read: “Our AI agents are now securely executing contract workflows end-to-end, and the IAM platform also ingested a record volume of agreements.”

Chart patterns show a double-bottom at $41.45 with a neckline near $57.22; the stock has moved above that level. The price is trading above its Supertrend indicator, and traders point to resistance near $86.60, the stock’s high from Sept. 18.